Capital One VA Expansion

Capital One announced plans Monday to expand its base of operations into Chesterfield County, Virginia.  The new site, to be located in the River’s Bend complex just south of the James River, will employ up to 600 associates.

The announcement of the Virginia-based expansion plans comes on the heels of Capital One’s announcement that it expects to hire more than 2,000 associates worldwide in 1998.

“Over the past three years as an independent company, our growth has been phenomenal.  We have consistently achieved 20 percent plus growth in earnings per share,” said Richard D. Fairbank, Chairman and Chief Executive Officer. “1998 promises to be just as successful for Capital One as we continue to expand in domestic and overseas markets, to innovate new products and to hire skilled associates.  We are targeting both earnings growth and return on equity of 20 percent for 1998.”

Operations in the greater Richmond area also include information technology services, customer relations call centers, production services, and many staff support functions.  The new site will function as a customer contact center, and will enable Capital One to better service its more than 12 million customers worldwide.  It measures approximately 78,000 square feet and is located at 701 Liberty Way in Chester, Va.

At today’s announcement, Virginia Governor Gilmore said, “Capital One has used cutting edge technology to become a true Virginia success story, and I am excited by its continued growth and commitment to its home state.”

Nigel Morris, President and Chief Operating Officer, responded, “Richmond has served as our home base since we became a public company in 1994.  We want to share our success with our Virginia-based associates, and we are pleased that the state and Chesterfield County officials enthusiastically supported Capital One’s expansion plans.”

With operations already in Richmond, Fredericksburg and Falls Church, Va.; Tampa, Fla.; Dallas/Fort Worth, Texas; as well as London and Nottingham, UK, Capital One presently employs over 6,000 associates worldwide.  More than 4,000 of Capital One’s 6,000 associates are located in the Richmond metropolitan area.

Local residents interested in learning more about employment opportunities with Capital One should call 1-800-77-HIRE-1.  Capital One is already accepting applications to staff the new site.  In addition to competitive salaries, associates also receive a generous compensation package that was designed by Capital One associates when the company went public. (Capital One is also recruiting for its West End, Richmond operations.)

Capital One Financial Corporation is a financial services company whose principal subsidiaries, Capital One Bank, and Capital One, F.S.B., offer consumer lending products.  Capital One’s subsidiaries collectively had 11.7 million customers and $14.2 billion in managed loans outstanding at December 31, 1997, and are among the largest providers of MasterCard and Visa credit cards in the world.

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Group Bull Buys NBS UK Card Services

NBS Technologies Inc signed an agreement to sell its Card Services business unit in the United Kingdom to Group Bull for net proceeds of approximately $9.5 million. The completion of the sale is subject to the satisfaction of certain conditions, which are expected to be completed by March 20, 1998. This sale will allow the company to reduce bank debt and to focus its resources on its European operations and other high growth opportunities.

“We see this as an exciting time for the introduction of new technologies, particularly solutions using smart cards and biometric identification. This divestiture fits with our strategy of focusing our energies on developing the technologies and expertise required to support our position as a leading supplier of card issuance, identification and transaction solutions,” commented Ken Kivenko, President and CEO.

Working together with its customers and business partners, whose applications range from financial debit, credit and electronic purse to biometric identification, electronic photo imaging and government card issuance programs, NBS Technologies will continue to provide high performance products and solutions for the next millennium.

NBS Technologies Inc. is a multinational company that designs, manufactures and markets an integrated line of card, card issuance, identification and point-of-sale products, services and software. Customers, who cover a wide range of market segments and applications, include financial institutions, retailers, government agencies, and healthcare organizations. The Company is a Toronto-based public company that sells to customers in over 85 countries through facilities located in Canada, the United States and the United Kingdom.

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Web Bank Sold

Royal Bank of Canada announced Monday it has agreed to acquire Atlanta-based Security First Network Bank,  the first bank to launch fully functional banking and related financial management services over the Internet. The transaction is expected to close this June. Royal Bank of Canada will also acquire an interest in Security First Holdings, which following a corporate reorganization, will be the majority shareholder in Security First Technologies, a software development company that provides Web banking software. The total cost of the transaction is valued at US$20 million  or CAN$29 million. As of February 28, 1998, SFNB’s banking assets and liabilities to be transferred consist of US $54.7 million in deposits, US$14.3 million in loans and US$46.5 million in securities.

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Resources Processing Sold

Carolina First Corporation announced the signing of a definitive merger agreement with Resource Processing Group, Inc. , a privately-held credit card services company located in Columbia, South Carolina.  Under the terms of the agreement, Carolina First will issue shares of Carolina First common stock valued at approximately $11.3 million.  The number of Carolina First shares to be issued depends on Carolina First’s common stock price at the time of closing, which is expected to occur in the second quarter of 1998.  Based on Friday’s closing market price of $24.875, Carolina First would have issued approximately 454,000 shares in connection with the purchase of RPG. Additional shares may become issuable if certain credit quality criteria are met.  The transaction will receive purchase accounting treatment.

RPG will become a wholly owned subsidiary of Carolina First Corporation. Substantially all of RPG’s activities are related to the origination and servicing of credit cards on behalf of third parties, one of which is Carolina First.  RPG does not have any receivables associated with credit cards or other loans.  At December 31, 1997, RPG had approximately $19.3 million in assets, total equity of approximately $10.6 million and 9,082,126 shares of stock outstanding.

Mack I. Whittle, Jr., President and Chief Executive Officer of Carolina First Corporation, said, “Carolina First will benefit by bringing back-office credit card processing services in-house.  We believe that achieving greater control over credit card customer service, credit approval and collections will enhance the performance of our credit card portfolio.  In addition, we anticipate the realization of significant cost savings making the acquisition financially attractive for our shareholders.”

Carolina First Corporation, headquartered in Greenville, South Carolina, is the largest independent bank holding company in South Carolina with $2.2 billion in total assets and 65 banking offices throughout the state.  Its four subsidiaries are Carolina First Bank (“CFB”), a state-chartered commercial bank; Carolina First Mortgage Company (“CFMC”), a mortgage banking operation; Blue Ridge Finance Company, an automobile finance company; and CF Investment Company, a small business investment company.  CFB is the largest South Carolina-based commercial bank, and CFMC is the second largest South Carolina- based mortgage loan servicer.  Through its subsidiaries, Carolina First provides a full range of banking services, including mortgage, trust and investment services, designed to meet substantially all of the financial needs of its customers.  Carolina First’s common stock trades on the Nasdaq National Market under the symbol CAFC.  Additional information about Carolina First is available on its web site at .

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Halting Chapter 7s

A first-ever nationwide study of bankruptcy petitions has found that nearly 150,000 filers who filed last year could have repaid a significant portion of what they owe. According to the new study by Ernst & Young LLP, these debtors could have repaid 64% of their unsecured debts, representing a potential recovery of more than $4 billion. The study found that, had the needs-based provision of H.R. 3150, the Bankruptcy Reform Act of 1998, been in effect, 15% of the 957,000 Chapter 7 filers in 1997 would have been ineligible for the debt relief they received and forced to file Chapter 13 plans instead. The Ernst & Young study is based on a review of 2,100 petitions filed last year in all 90 bankruptcy courts nationwide.

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VISA POS Tops $700 Million

Visa International reported an all time high in POS purchase volume yesterday.  In the 12 months ended September 30, 1997, almost 70 per cent of Visa’s $1.1 trillion total volume was generated at retail and travel and entertainment related outlets around the world, a  38% gain over the past two years. Visa’s $1.1 trillion total volume, which includes purchase volume and cash transactions, was 22% higher than volume for the comparable 1996 period. In the past two years, Visa’s worldwide share of personal consumption expenditure, or PCE, against cash has grown 30 per cent to 4.2 per cent, with each percentage point increase representing close to $200 billion. Preliminary results for calendar year 1997 show another 20 percent increase in Visa worldwide volume. Visa’s global card base also increased by 14% to 618 million cards in circulation at the end of the third quarter.

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MDC Update

MDC Communications Corporation today announced its financial results for the fourth quarter and year ended December 31, 1997, reporting continuing growth in both sales and profitability from continuing operations. For the year, sales from continuing operations were $280.0 million, an increase of $121.8 million or 77 percent over the $158.2 million achieved in 1996. Operating income was $35.6 million, up $13.4 million or 60 percent over the $22.2 million recorded in 1996. Net income from continuing operations reached $7.8 million in 1997, an increase of $3.1 million or 66 percent over the $4.7 million achieved in 1996. Fully diluted earnings per share from continuing operations were $0.49, up $0.09 or 23 percent over the $0.40 reported in 1996. Fully diluted cash flow per share from continuing operations was $1.41, up from $0.99, representing a 42 percent increase over the prior year.

“We are pleased with the strength of our results from continuing operations in both Security and Specialty Products and Communications and Marketing Services, which met or exceeded our internal targets,” said Miles S. Nadal, President and Chief Executive Officer. “More importantly, we are anticipating that this earnings momentum will continue in 1998 and beyond as the impact from both recent contract awards and capital spending continue to accelerate internal growth at MDC’s operating units.”

During 1997, MDC was awarded long-term contracts valued at over $500 million for the provision of various security products and services. These contracts were across our product lines including personal and business cheques with all major Canadian financial institutions, and major postage stamp contracts with the United States Postal Service and the Royal Mail. In addition, the company expanded its direct-to-consumer cheque business in the United States through the acquisition of Image Checks in Arkansas and the pending acquisition of Artistic Checks in New York. The company also established a security card operation producing credit, debit, telephone and smart cards to complement its dominant market position in cheques in Canada, through the acquisition of Bicybec Ltee in Quebec and the acquisition of CIBC’s National Card Production Unit. Such contract awards and acquisitions are expected to further expand MDC’s payment systems business and further the growth of MDC in 1998 and beyond.

The Security and Specialty Products division achieved record sales of $195.3 million in 1997, more than doubling its 1996 sales of $93.0 million. Operating income of the Security and Specialty Products division also grew substantially in 1997, increasing from $17.0 million in 1996 to $31.0 million in 1997, an increase of 82 percent. The Communications and Marketing Services division also had record sales in 1997, posting sales of $66.8 million or 45 percent more than the $46.1 million achieved in 1996. Operating income of the Communications and Marketing Services division increased from $5.6 million in 1996 to $8.9 million in 1997, an increase of 59 percent over the prior year, strongly outpacing the rate of sales growth for the year.

In accordance with MDC’s planned divestiture of Regal Greetings and Gifts (“Regal”), the financial results of Regal have been classified as discontinued operations in the company’s 1997 and comparative period financial results. MDC reported a loss from discontinued operations of $28.6 million in 1997 compared to net earnings from discontinued operations of $2.3 million in 1996.

This loss from discontinued operations includes a previously reported $11.2 million restructuring charge taken in the first quarter of 1997. Regal’s operating loss for the year was severely impacted by the Canadian postal strike during the mail order Catalog Company’s peak Christmas selling season. In addition, a provision has been included for the estimated costs to complete the divestiture process currently underway. Despite the anticipated significant increases in profitability for the discontinued operations of Regal Greetings and Gifts in 1998, it is management’s belief that the divestiture process currently underway will result in the maximization of shareholder value.

In the fourth quarter, MDC posted sales from continuing operations of $77.8 million, up $28.6 million or 58 percent from the $49.2 million achieved in the prior year’s fourth quarter. Operating income rose 13 percent in the fourth quarter, from $8.9 million in 1996 to $10.0 million in 1997. Net income from continuing operations was $2.2 million in the fourth quarter of 1997, up 28 percent from the $1.7 million reported in 1996.

Fully diluted earnings per share from continuing operations also improved from $0.14 in 1996 to $0.15 in 1997, an increase of 7 percent over the prior year. Fully diluted cash flow per share improved by 18 percent, from $0.33 in 1996 to $0.39 per share in 1997 fourth quarter.

Sales of the Security and Specialty Products division totaled $55.0 million in the 1997 fourth quarter, up $21.7 million or 65 percent from the $33.3 million achieved in the fourth quarter of 1996. Operating income grew from $6.9 million in 1996 to $9.5 million in 1997, an increase of 38 percent. The Communications and Marketing Services division posted sales of $19.2 million in the 1997 fourth quarter, or 60 percent more than the $12.0 million achieved in 1996. Operating income increased from $1.7 million in 1996 to $2.2 million in 1997, up 29 percent.

“Now that MDC is focusing on its core Security and Specialty Products division, we are developing a consistently stable, predictable and growing company. With our new strategic plan, we are now positioned to significantly enhance shareholder value in 1998 and beyond,” said Nadal. “We are focused on executing our plan in an orderly manner and concentrating on our core businesses in order to fully unlock shareholder value and exploit the plentiful growth opportunities available to the company.”

Earlier this year, MDC announced a new strategic plan intended to focus the operation on its core Security and Specialty Products business, divest its Regal Greetings and Gifts operations, and build its Communications and Marketing Services division to critical mass. MDC will explore ways to crystallize the value of its Communications and Marketing Services division, possibly by way of an Initial Public Offering within the medium term.

The recent establishment of the Business and Technology Services Group supports the focused corporate strategy announced in January, and complements MDC’s initiatives in Security Card Products and business services of the Payment Systems Group. Now MDC is able to take advantage of the growing demand for back office services, as MDC’s corporate customers focus on their strategic competencies and outsource other areas of functional expertise.

MDC is a publicly traded international organization with operating units in Canada, the United States, the United Kingdom, and Australia. The company is a leading provider of security product solutions and marketing services to customers in over 65 countries around the world. MDC has a strong record of growth, generated both internally and from strategic corporate acquisitions.

MDC offers security product solutions in five core offerings personal and business cheques; postage and excise stamps; credit, debit, and smart cards; event and transportation tickets; and outsourcing solutions including remittance processing, data imaging, corporate payables, personalization and fulfillment, and data management.

MDC shares are traded on the Toronto Stock Exchange under the symbol MDZ.A and on the American Stock Exchange under the symbol MDQ.

MDC COMMUNICATIONS CORPORATION
CONSOLIDATED FINANCIAL SUMMARY
FOURTH QUARTER 1997 AND 1996
($,000’s – except per share amounts)

For the Year Ended December 31,    1997     1996     Change
                               —————————–

Sales                            280,020   158,211     77
                                                     Percent

Operating Income                  35,646    22,188     61
                                                     Percent

EBITDA                            32,776    20,930     57
                                                     Percent

Cash Flow from
  continuing operations          22,432     12,616    78
                                                     Percent

Income from continuing
  operations                      7,781      4,731     64
                                                     Percent

Income (loss) from
  discontinued operations     (28,618)(xx) 2,308(xx) (1340)
                                                    (Percent)

Net Income (loss)               (20,837)    7,039    (396)
                                                    (Percent)

Earnings Per Share
From Continuing Operations
  –  Basic                         0.50      0.41      22
                                                     Percent

  –  Fully Diluted                 0.49      0.40      23
                                                     Percent

As Reported
  – Basic                      (1.82)(xx)   0.61(xx) (398)
                                                    (Percent)

  – Fully Diluted              (1.82)(xx)   0.58(xx) (414)
                                                    (Percent)

Cash Flow Per Share
>From Continuing Operations
   – Basic                         1.69       1.09     55
                                                     Percent

   – Fully Diluted                 1.41       0.99     42
                                                     Percent

As Reported
  – Basic                       0.71(xx)  1.49(xx)    (52)
                                                    (Percent)

– Fully Diluted                0.67(xx)  1.34(xx)   (50)
                                                    (Percent)

Weighted average shares outstanding during the year
for earnings per share purposes

     Basic                  12,309,924  11,592,315     6
                                                     Percent

     Fully diluted          14,355,730  13,049,267    10
                                                     Percent
                              —————————–

(xx) During the fourth quarter of 1997, the Company formally
adopted a plan to divest its Regal Greetings and Gifts operations
and, as such, Regal’s results of operations have been classified
as discontinued operations in 1997 and comparative period
financial results.

MDC COMMUNICATIONS CORPORATION
CONSOLIDATED FINANCIAL SUMMARY
FOURTH QUARTER 1997 AND 1996
($,000’s – except per share amounts)

For the Three Months
  Ended December 31,            1997       1996     Change
                              —————————–

Sales                           77,796      49,223     58
                                                   Percent

Operating Income                 10,014      8,877     13
                                                   Percent

EBITDA                            9,267      8,445    10
                                                   Percent

Cash Flow from
  continuing operations          6,660       4,593     45
                                                   Percent

Income from continuing
   operations                     2,209      1,730     28
                                                   Percent

Income (loss) from
   discontinued operations (11,680)(xx) 3,723(xx)   (414)
                                                  (Percent)

Net Income (loss)                  (9,471)  5,453   (274)
                                                 (Percent)

Earnings Per Share
>From Continuing Operations
– Basic                            0.15    0.15        0
                                                  Percent

– Fully Diluted                    0.15    0.14        7
                                                  Percent

As Reported
– Basic                      (0.80)(xx)  0.47(xx)   (270)
                                                 (Percent)

– Fully Diluted              (0.80)(xx)  0.44(xx)  (282)
                                                 (Percent)

Cash Flow Per Share
>From Continuing Operations
   – Basic                         0.47       0.38     24
                                                   Percent

  – Fully Diluted                  0.39       0.33     18
                                                   Percent

As Reported
– Basic                        0.41(xx) 0.86(xx)  (52)
                                                  (Percent)

– Fully Diluted                0.38(xx) 0.75(xx)  (49)
                                                  (Percent)
                               —————————–

(xx) During the fourth quarter of 1997, the Company formally
adopted a plan to divest its Regal Greetings and Gifts operations
and, as such, Regal’s results of operations have been classified
as discontinued operations in 1997 and comparative period
financial results.

MDC COMMUNICATIONS CORPORATION
CONSOLIDATED FINANCIAL SUMMARY
FOURTH QUARTER 1997 AND 1996
($,000’s – except per share amounts)

SEGMENTED INFORMATION – BY OPERATING DIVISION

For the Three Months
  Ended December 31,                1997     1996    Change
                              —————————–

Security and Specialty Products

Sales                            54,952    33,271      65
                                                    Percent

Operating Income                  9,457     6,892      37
                                                    Percent

Communications and Marketing Services

Sales                            19,233    12,024      60
                                                    Percent

Operating Income                  2,151     1,686      28
                                                    Percent
                              —————————–

For the Year Ended December 31,    1997      1996    Change
                              —————————–

Security and Specialty Products

Sales                           195,318     93,015    110
                                                    Percent

Operating Income                31,012      17,008     82
                                                    Percent

Communications and Marketing Services

Sales                            66,763     46,067     45
                                                    Percent

Operating Income                  8,865      5,621     58
                                                    Percent
                             —————————–

CONDENSED CONSOLIDATED BALANCE SHEET

                             —————————–
As at December 31,                1997      1996    Change
                             —————————–

Cash and Short Term Investments  10,793     41,937    (74)
                                                  (Percent)

Other Current Assets            112,568     84,031     34
                                                   Percent

Other Assets                    294,148    235,967     25
                                                   Percent
                             —————————–
Total Assets                    417,509    361,935     15
                                                   Percent
                             —————————–
                             —————————–
Current Liabilities              92,668     64,075     45
                                                   Percent

Long Term Indebtedness          205,634    190,907      8
                                                   Percent

Minority Interest                 2,039      1,177     73
                                                   Percent

Shareholders’ Equity            117,168    105,776     11
                                                   Percent
                             —————————–

Total Liabilities
  and Shareholders’ Equity      417,509    361,935     15
                                                   Percent
                             —————————–
                             —————————–

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Providian’s NH Gift

Providian Financial Corporation Chairman and Chief Executive Officer Shailesh J. Mehta announced last week that Providian will earmark $250,000 for after school care programs. Providian recently committed $5 million to child care in New Hampshire.  The announcement was made at a ceremony attended by Vice President Al Gore and Education Secretary Richard Riley.

“At Providian, we care about child care,” said Shailesh J. Mehta, “I believe today’s investment will have a positive impact on the school age children, their parents and the community.”

According to recent studies, funds are clearly needed to address issues surrounding the lack of after school care.  Statistics show that while 60% of New Hampshire’s school age children need after school care, existing slots accommodate only 21% of these children.

Providian will work with the Office of New Hampshire Governor Jeanne Shaheen, the non-profit organization PlusTime NH, and other community-based organizations to determine the best use of funding for after school care. PlusTime NH works to support the development of quality, affordable and accessible out-of-school programs for school age children and youth.

Providian Financial Corporation, the parent company of Concord, New Hampshire-based Providian National Bank, is a leading provider of lending and deposit products to consumers nationwide.  The company is a member of the S&P 500 Index (Consumer Finance Industry Group).  With over $11 billion in assets under management and over five million customers, the company serves a broad, diversified market with loan products which include credit cards, revolving lines of credit, home loans, secured credit cards, and fee-based services. Providian Financial is headquartered in San Francisco, California and ranks among the fifteen largest credit card issuers in the nation and is the largest issuer of secured credit cards.

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Potential Partner

The fastest growing frequent motel guest program expanded by 700,000 members last year to surpass the 5,000,000 member mark. The ‘Super 8 V.I.P. Club’ card is signing up a new member every 45 seconds. The ‘V.I.P. Club’ card offers a 10% room discount, guaranteed reservations without a credit card, payment of room charges by check and special check cashing privileges. The economy lodging giant has 1,600 motels and 100,000 rooms in the U.S. and Canada.

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Drexler Adds Board Member

Drexler Technology Corporation is pleased to announced that Dr. Dan Maydan joined its board of directors on March 5, 1998.

Dr. Maydan has joined the Drexler board as an outside director on a personal basis unrelated to his corporate affiliations. The Drexler Technology board of directors has been increased from three members to four members.

Dr. Maydan is president and member of the board of directors of Applied Materials, Inc. (NASDAQAMAT), the world’s largest semiconductor manufacturing equipment company, with 12,000 employees. He also is co-chairman of the board of directors of Applied Komatsu Technology, a joint venture formed in September 1993 with Komatsu, Ltd. for manufacturing and marketing of systems for the flat-panel display industry.

Before joining Applied Materials, Inc. in September of 1980, Dr. Maydan spent 13 years in various positions with Bell Laboratories in New Jersey, during which time he pioneered laser recording of data on thin-metal films and made significant technical advances in photo lithography and vapor deposition technology for semiconductor manufacturing systems. Dr. Maydan received his B.S. and M.S. degrees in electrical engineering from Technion – Israel Institute of Technology and his Ph.D. in physics from Edinburgh University, Scotland.

Headquartered in Mountain View, Drexler Technology Corporation manufactures 4-megabyte LaserCard(R) optical memory cards and “microchip ready” Smart/Optical(TM) cards. Drexler has been granted about 50 U.S. patents plus foreign counterpart patents on laser recording of data on thin-metal films, on laser-recordable optical memory cards, and on related systems and equipment. The Company’s wholly owned subsidiary, LaserCard Systems Corporation, develops system software for PC-based optical memory card systems.

LaserCard(R) applications include immigration cards, cargo manifests, access control cards, healthcare records, high security/interactive ID cards, automotive records, medical image storage, portable records with audit trails, and consumer transaction systems.

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Sluggish Start

Growth in revolving credit is off by more than 50% so far this year. According to January consumer credit figures released by the Federal Reserve Friday, revolving credit is growing at an annual rate (seasonally adjusted) of 6.1% compared to 14.7% for last January. Overall consumer credit is currently growing at an annual clip of 2.8% compared to 10.0% this time last year. Loans for miscellaneous purposes such as education, boats, trailers and vacations declined for the third consecutive month. At the end of January American consumers were $1.238 trillion in debt, exclusive of home mortgages.

                                 REVOLVING CREDIT HISTORICAL
Jan 98  Dec 97   Nov 97  Oct97  Sep97  Aug97 Jul97  Jun97 May97 Apr97
%GRWTH 6.1%    2.3      -2.1    10.1   6.2    8.0   9.4    4.2 4.6   6.9
$OWED 533.5   530.8    529.8   530.7  526.4  523.7 520.2 516.2 14.3  512.4
Source Federal Reserve; revised figures as of 03/06/98

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